Roche details R&D cuts, new buyout plans in global restructuring

After gingerly absorbing Genentech ($DNA) into its ranks, the Swiss pharma giant has finally brought out the big budget axe. And while much of the cost cutting will take place in manufacturing and sales, Roche also specified some significant trimming ahead for its massive R&D ops.

In specific, Roche says it will end RNA interference research in Kulmbach, Germany, and in Nutley, NJ and Madison, WI. Less certain is what will change for the product development group. Roche only says that "certain product development activities are expected to be discontinued or transferred--most of them from the US--to other Roche sites or third parties to improve overall productivity. Roughly 800 positions will be affected by the planned reductions or transfers."

Roche says it will pink slip more than 4,000 workers overall, with a couple thousand more facing transfers to new locations. In addition to the 800 product development jobs to be cut or transferred, another 600 jobs will be similarly affected in R&D with 640 more at stake in the company's growing diagnostics division. Company officials say the restructuring--originally announced in September--will take two years to complete.

"We are committed to our model, which is clearly focused on innovation and we will continue to invest into R&D", CEO Severin Schwan (photo) told the Wall Street Journal. Schwan declined to outline what the company's R&D budget--which hit $8.7 billion in 2009, the largest in the pharma industry--would be cut to in 2011. "But we are taking measures to increase productivity in R&D." Schwan also said that Roche would continue to look for small and medium-sized acquisitions so it could add to the 90 compounds that it has in its pipeline.

- read the Roche release
- and here's the WSJ story